Apple’s manufacturing plans for India do not necessarily equate to cheaper iPhones

We reported that Apple was planning to kick off manufacturing in India with the iPhone SE. It is being expected that the company will begin by assembling around 3 to 4 lakh units of iPhone SE at its Karnataka plant. However, those who are expecting an instantaneous drop in iPhone prices could well be disappointed.

At present, Apple’s iPhones cost more in India then they do almost anywhere else. Which is kind of strange, considering that the Indian smartphone market is one of the few major ones that still has a lot of scope for growth. You would think that Apple would attempt to make new inroads by dropping prices down until it could compete with domestic, as well as other foreign players. However, thanks to huge import taxes among other things, iPhones still come at a premium.

In the 4th quarter of 2016, Chinese smartphone brands were the ones that made the most sales. Indeed, the top 5 smartphone sellers had no Indian brands for the first time. Apple managed to capitalize as well and sold off almost 2.5 million units in the country — which is a good number, but is still far from the scope of growth actually available here. In India, Apple devices are still seen as something of a status symbol and indeed, sell for premium prices. And that trend is likely to continue for a while, even after the Bangalore plant starts churning out devices.

Apple is not known to abruptly drop prices and thus the saving could go towards building foundation for Apple’s retail and marketing footprint.

He added:

Apple though selectively offers discount only during festive season and that could be also 4-5 percent [price cuts] max and not the entire 12-13 percent [saving from local production] will be passed on to consumers.

So what does that mean? That means, even after Apple’s Bangalore unit starts pushing out iPhones, the cost benefit wouldn’t immediately reflect on the price tags. Eventually, yes. The prices could go down as the company accelerates its manufacturing efforts. But if you expect to pick up a new iPhone at half price within the next few months? That is probably no.

Of course, it is far too early to comment on Apple’s strategy for India with any confidence at this point of time. India is a hugely important market for smartphone vendors now that China and the US are reaching their saturation points. There is still a huge population in India that has to make the shift to smartphone and a well placed device could indeed do very well. Judging by the way the winds are blowing though, Android is likely to remain the platform that introduces Indians to smartphones in the majority of cases.